House Study Bill 272 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON HEIN)
A BILL FOR
1 An Act relating to tax collection and penalties, tax permits,
2 and loans made by state-chartered banks.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
TLSB 2795YC (1) 89
jm/jh
 H.F. _____
1 Section 1. Section 421.27, Code 2021, is amended to read as
2 follows:
3 421.27 Penalties.
4 1. Failure to timely file a return or deposit form.
5 a. If a person fails to file a return with the department
6 on or before the due date a return or deposit form, there shall
7 be added to the tax shown due or required to be shown due
8 remaining unpaid by the due date a penalty of ten five percent
9 of the remaining unpaid tax shown due or required to be shown
10 due.
11 b. In the case of a specified business with no tax shown
12 due or required to be shown due that fails to timely file an
13 income return, the specified business shall pay the greater of
14 the following penalty amounts:
15 (1) Two hundred dollars.
16 (2) An amount equal to ten five percent of the imputed Iowa
17 liability of the specified business, not to exceed twenty-five
18 thousand dollars.
19 c. The penalty, if assessed pursuant to paragraph “a” or
20 “b”, shall be in addition to any other penalty provided by law.
21 d. The penalty, if assessed pursuant to paragraph “a” or
22 “b”, shall be waived by the department upon a showing by the
23 taxpayer of any of the following conditions:
24 (1) An amount of tax greater than zero is required to be
25 shown due and at least ninety percent of the tax required to be
26 shown due has been paid by the due date of the tax.
27 (2) (a) Those taxpayers who are A taxpayer who is
28 required to file a monthly or quarterly returns, or monthly or
29 semimonthly deposit forms return may have one late return or
30 deposit form one late payment within a three-year period.
31 (b) If the taxpayer receives a waiver of a penalty under
32 this subparagraph, the taxpayer must make timely filings
33 and payments for three years prior to being eligible for
34 receiving another waiver under this subparagraph. If the
35 taxpayer receives a waiver under this subparagraph, the waiver
LSB 2795YC (1) 89
-1- jm/jh 1/15
 H.F. _____
1 shall apply to penalties assessed under this subsection and
2 subsection 2.
3 (c) The use of any other penalty exception will shall
4 not count as a late return or deposit form late payment for
5 purposes of this exception receiving a waiver by the taxpayer
6 under this subparagraph.
7 (3) The death of a taxpayer, death of a member of the
8 immediate family of the taxpayer, or death of the person
9 directly responsible for filing the return and paying the tax,
10 when the death interferes with timely filing of a return or
11 timely payment of tax.
12 (4) The onset of serious, long-term illness or
13 hospitalization of the taxpayer, of a member of the immediate
14 family of the taxpayer, or of the person directly responsible
15 for filing the return and paying the tax when such illness or
16 hospitalization interferes with the timely filing of a return
17 or timely payment of tax.
18 (5) Destruction of records by fire, flood, or other act of
19 God when the destruction interferes with the timely filing of a
20 return or timely payment of tax.
21 (6) The taxpayer presents proof that the taxpayer relied
22 upon applicable, documented, written advice specifically
23 made to the taxpayer, to the taxpayer’s preparer, or to an
24 association representative of the taxpayer from the department,
25 state department of transportation, county treasurer, or
26 federal internal revenue service, whichever is appropriate,
27 that the reliance was the direct cause of the failure to file
28 or failure to pay, and that the advice has not been superseded
29 by a court decision, ruling by a quasi-judicial body, or the
30 adoption, amendment, or repeal of a rule or law.
31 (7) Reliance upon results in a previous audit was a direct
32 cause for the failure to file or the failure to pay where the
33 previous audit expressly and clearly addressed the issue and
34 the previous audit results have not been superseded by a court
35 decision, or the adoption, amendment, or repeal of a rule or
LSB 2795YC (1) 89
-2- jm/jh 2/15
 H.F. _____
1 law.
2 (8) Under rules prescribed by the director, the taxpayer
3 presents documented proof of substantial authority to rely
4 upon a particular position or upon proof that all facts and
5 circumstances are disclosed on a return or deposit form.
6 (9) The return, deposit form, or payment is timely, but
7 erroneously, mailed with adequate postage to the internal
8 revenue service, another state agency, or a local government
9 agency and the taxpayer provides proof of timely mailing with
10 adequate postage.
11 (10) The tax has been paid by the wrong licensee and the
12 payments were timely remitted to the department for one or more
13 tax periods prior to notification by the department.
14 (11) The failure to file was discovered through a sanctioned
15 self-audit program conducted by the department.
16 (12) If the availability of funds in payment of tax required
17 to be made through electronic funds transfer is delayed and the
18 delay of availability is due to reasons beyond the control of
19 the taxpayer. “Electronic funds transfer” means any transfer
20 of funds, other than a transaction originated by check, draft,
21 or similar paper instrument, that is initiated through an
22 electronic terminal telephone, computer, magnetic tape, or
23 similar device for the purpose of ordering, instructing, or
24 authorizing a financial institution to debit or credit an
25 account.
26 (13) The failure to file a timely inheritance tax return
27 resulting solely from a disclaimer that required the personal
28 representative to file an inheritance tax return. The penalty
29 shall be waived if such return is filed and any tax due is paid
30 within the later of nine months from the date of death or sixty
31 days from the delivery or filing of the disclaimer pursuant to
32 section 633E.12.
33 (14) That an Iowa inheritance tax return is filed for
34 an estate within the later of nine months from the date of
35 death or sixty days from the filing of a disclaimer by the
LSB 2795YC (1) 89
-3- jm/jh 3/15
 H.F. _____
1 beneficiary of the estate refusing to take the property or
2 right or interest in the property.
3 2. Failure to timely pay the tax shown due, or the tax
4 required to be shown due, with the filing of a return or deposit
5 form. If a person fails to pay the tax shown due or required
6 to be shown due, on a return or deposit form on or before the
7 due date, there shall be added to the tax shown due or required
8 to be shown due remaining unpaid by the due date a penalty of
9 five percent of the unpaid tax due. The penalty shall be in
10 addition to any other penalty provided by law. The penalty, if
11 assessed, shall be waived by the department upon a showing by
12 the taxpayer of any of the following conditions:
13 a. At least ninety percent of the tax required to be
14 shown due has been paid by the due date of the tax Any reason
15 listed under subsection 1, paragraph “d”, except subsection 1,
16 paragraph “d”, subparagraph (11).
17 b. The taxpayer voluntarily files an amended return and pays
18 all tax shown to be due on the return prior to any contact by
19 the department, except under a sanctioned self-audit program
20 conducted by the department.
21 c. (1) Except in the case of a final federal partnership
22 adjustment governed by subparagraph (2), the taxpayer
23 voluntarily files an amended return which includes a copy of
24 the federal document showing the final disposition or final
25 federal adjustments and pays any additional Iowa tax due within
26 one hundred eighty days of the final determination date of the
27 federal government’s audit. For purposes of this subparagraph,
28 “final determination date” means the same as defined in section
29 422.25.
30 (2) (a) In the case of a final federal partnership
31 adjustment arising from a partnership level audit, with respect
32 to the audited partnership or a direct partner or indirect
33 partner of the audited partnership, the audited partnership,
34 direct partner, or indirect partner voluntarily and timely
35 complies with its reporting and payment requirements under
LSB 2795YC (1) 89
-4- jm/jh 4/15
 H.F. _____
1 section 422.25A, subsection 4 or 5.
2 (b) As used in this subparagraph, all words and phrases
3 defined in section 422.25A shall have the same meaning given
4 them by that section.
5 d. The taxpayer presents proof that the taxpayer relied
6 upon applicable, documented, written advice specifically
7 made to the taxpayer, to the taxpayer’s preparer, or to an
8 association representative of the taxpayer from the department,
9 state department of transportation, county treasurer, or
10 federal internal revenue service, whichever is appropriate,
11 that has not been superseded by a court decision, ruling by a
12 quasi-judicial body, or the adoption, amendment, or repeal of
13 a rule or law.
14 e. Reliance upon results in a previous audit was a direct
15 cause for the failure to pay the tax required to be shown due
16 where the previous audit expressly and clearly addressed the
17 issue and the previous audit results have not been superseded
18 by a court decision, or the adoption, amendment, or repeal of
19 a rule or law.
20 f. Under rules prescribed by the director, the taxpayer
21 presents documented proof of substantial authority to rely
22 upon a particular position or upon proof that all facts and
23 circumstances are disclosed on a return or deposit form.
24 g. The return, deposit form, or payment is timely, but
25 erroneously, mailed with adequate postage to the internal
26 revenue service, another state agency, or a local government
27 agency and the taxpayer provides proof of timely mailing with
28 adequate postage.
29 h. The tax has been paid by the wrong licensee and the
30 payments were timely remitted to the department for one or more
31 tax periods prior to notification by the department.
32 i. That an Iowa inheritance tax return is filed for an
33 estate within the later of nine months from the date of
34 death or sixty days from the filing of a disclaimer by the
35 beneficiary of the estate refusing to take the property or
LSB 2795YC (1) 89
-5- jm/jh 5/15
 H.F. _____
1 right or interest in the property.
2 3. Audit and examination deficiencies. If any person
3 fails to pay the tax required to be shown due with the filing
4 of a return or deposit and the department discovers the
5 underpayment, there shall be added to the tax required to be
6 shown due a penalty of five percent of the unpaid tax required
7 to be shown due, which shall be in lieu of the penalty in
8 subsection 2. The penalty, if assessed, shall be waived by
9 the department upon a showing by the taxpayer of any of the
10 following conditions:
11 a. At least ninety percent of the tax required to be shown
12 due has been paid by the due date.
13 b. The taxpayer presents proof that the taxpayer relied upon
14 applicable, documented, written advice specifically made to
15 the taxpayer, to the taxpayer’s preparer, or to an association
16 representative of the taxpayer from the department, state
17 department of transportation, county treasurer, or federal
18 internal revenue service, whichever is appropriate, that the
19 reliance was the direct cause for the failure to pay, and that
20 the advice has not been superseded by a court decision, ruling
21 by a quasi-judicial body, or the adoption, amendment, or repeal
22 of a rule or law.
23 c. Reliance upon results in a previous audit was a direct
24 cause for the failure to pay the tax shown due or required to
25 be shown due where the previous audit expressly and clearly
26 addressed the issue and the previous audit results have
27 not been superseded by a court decision, or the adoption,
28 amendment, or repeal of a rule or law.
29 d. Under rules prescribed by the director, the taxpayer
30 presents documented proof of substantial authority to rely
31 upon a particular position or upon proof that all facts and
32 circumstances are disclosed on a return or deposit form.
33 4. Willful failure to file or deposit pay.
34 a. (1) In case of willful failure to file a return
35 or deposit form with the intent to evade tax or a filing
LSB 2795YC (1) 89
-6- jm/jh 6/15
 H.F. _____
1 requirement, willful failure to pay with the intent to evade
2 tax, or in case of willfully filing a false return or deposit
3 form with the intent to evade tax, in lieu of the penalties
4 otherwise provided in this section, there shall be added to the
5 tax remaining unpaid by the due date a penalty of seventy-five
6 percent shall be added to the amount shown due or required to
7 be shown as tax on the return or deposit form of the unpaid tax.
8 (2) In case of a willful failure by a specified business to
9 file an income return with no tax shown due or required to be
10 shown due with intent to evade a filing requirement, or in case
11 of willfully filing a false income return with no tax shown due
12 or required to be shown due with the intent to evade reporting
13 of Iowa-source income, the penalty imposed shall be the greater
14 of the following amounts:
15 (a) One thousand five hundred dollars.
16 (b) An amount equal to seventy-five percent of the imputed
17 Iowa liability of the specified business.
18 (3) If penalties are applicable for failure to file a
19 return or deposit form and failure to pay the tax shown due or
20 required to be shown due on the return or deposit form, the
21 penalty provision for failure to file shall be in lieu of the
22 penalty provisions for failure to pay the tax shown due or
23 required to be shown due on the return or deposit form, except
24 in the case of willful failure to file a return or deposit form
25 or willfully filing a false return or deposit form with intent
26 to evade tax.
27 b. The penalties imposed under this subsection are not
28 subject to waiver.
29 5. Failure to remit on extension. If a person fails to
30 remit at least ninety percent of the tax required to be shown
31 due by the time an extension for further time to file a return
32 is made, there shall be added to the tax shown due or required
33 to be shown due a penalty of ten percent of the unpaid tax due.
34 6. Liability —— fraudulent practice. A person who makes
35 an erroneous application for refund, credit, reimbursement,
LSB 2795YC (1) 89
-7- jm/jh 7/15
 H.F. _____
1 rebate, or other payment shall be liable for any overpayment
2 received or tax liability reduced plus interest at the rate in
3 effect under section 421.7.
4 a. In addition, a person commits a fraudulent practice and
5 is liable for a penalty equal to seventy-five percent of the
6 refund, credit, exemption, reimbursement, rebate, or other
7 payment or benefit being claimed if the person does any of the
8 following:
9 (1) Willfully makes a false or frivolous application for
10 refund, credit, exemption, reimbursement, rebate, or other
11 payment or benefit with intent to evade tax or with intent to
12 receive a refund, credit, exemption, reimbursement, rebate, or
13 other payment or benefit, to which the person is not entitled.
14 (2) Willfully submits any false information, document,
15 or document containing false information in support of an
16 application for refund, credit, exemption, reimbursement,
17 rebate, or other payment or benefit with the intent to evade
18 tax or with intent to receive a refund, credit exemption,
19 reimbursement, rebate, or other payment or benefit, to which
20 the person is not entitled.
21 (3) Willfully submits with any false information, document,
22 or document containing false information in support of an
23 application for refund with the intent to evade tax or with
24 intent to receive a refund, credit, exemption, reimbursement,
25 rebate, or other payment benefit, to which the person is not
26 entitled.
27 b.